Consumer Alert: Here’s why the price of crude oil is down but gas prices are up

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ROCHESTER, N.Y. – We love our viewers. A viewer who calls himself Mr. M wants to know why gas prices are still so high when crude oil prices are so low? Deanna Dewberry loves this question on so many levels.

Firstly, she loves that Mr. M is tracking crude oil prices. Secondly, he obviously has a keen understanding of the relationship between crude oil and gasoline. Crude oil is the primary ingredient in gasoline. That’s why we so often see a correlation between the price of a barrel of that black gold in the field and the price we pay at the pump.

In 2022, the price of crude accounted for 61% of the price of gasoline. The rest of the price was determined by refinery costs, distribution, corporate profits, as well as state and federal taxes.

But, we’ve seen the price of crude steadily dropping in May. On Wednesday crude closed at just under $68 a barrel. That’s cheap when you consider the fact that crude spiked to $130 a barrel last March. So when crude is cheap, why are we nearing four bucks for a gallon of gas? That’s a question for Patrick De Haan, GasBuddy’s head of petroleum analysis.

“The price of crude oil is a pretty strong relationship with gasoline, but there’s a middle party that can disrupt that relationship, and that is the refinery,” De Haan explained. “If refineries globally or in the United States are not refining as much crude oil, the price of crude oil can go down and the price of crude oil can go up. And so maybe that’s what your viewer is missing the connection on, is that the price of oil is not a hundred percent related to the price of gasoline. they can move independently of each other.”

And refinery capacity, or lack thereof, is why we pay more for gas in the Northeast. In short, we have far fewer refineries in this part of the country, so we pay higher distribution costs. So in short Mr. M, if we want to blame someone for the price of gas, we can blame refineries for refining less crude thereby driving up the price of gas.

And Deanna is with you Mr. M, she doesn’t like it either. News10NBC hopes that answers your question.